Centre of Excellence in Energy

(Photo:Bloomberg) India is now an electricity surplus country with an installed capacity of 369,000 megawatts (MW) against its peak demand of 183,804 MW. Independent power producers in the private sector now account for 47% of overall capacity—48% of thermal and 43% of renewable—while the Centre owns 25% of it and state governments the rest. The utilization trend has been away from coal and natural gas fired plants towards facilities for renewable energy. Peak demand has plummeted during the country’s current lockdown. This has made India’s excess capacity problem even worse. What has caught distribution utilities in a bind, however, are the power purchase agreements (PPAs) they had signed earlier with suppliers that generate electricity. Larger supplies have been tied up through these deals than there is demand for. By 2017-18, the country had around 334,000 MW of installed capacity, of which 291,000 was under long-term PPAs. Competitive procurement has meant declining tarif...

Reduction in power demand during Covid-19 lockdown explains that power demand depends largely on the level of socioeconomic activities. Meeting the full demand would be a function of available generation, access to load centre and also health of Discoms. India has a total generating capacity of about 368GW as on January 2020, whereas the maximum peak demand reached so far, was around 183GW. Renewable Energy capacity also has doubled over the last five years to become almost 23 % of the installed capacity of utilities, though electricity generated from Renewable Energy (RE) is still only 9 % due to low capacity utilization factor (CUF) of about 14-15%. The current extent of flexibilization in conventional thermal plants cannot efficiently make up for variability induced by must run RE plants. As a result, Discoms has done more PPA than required and now end up paying excess fixed charges. The problem has further been compounded by the current downside in consumption and peak load ...

Covid-19 has created a complex maze of power financing. Lockdown has pulled power demand down by 28%. Energy consumption fell by 25%.  Downside in power demand would persist even after lockdown is lifted as subdued economic activity would take around a year to regain the lost height. As an essential service power supply and maintenance continue but meter reading, billing and collection are disrupted. Distribution Utilities (DISCOMs) in India collect Rs 60,000 crore a month from consumers. Traditionally, outstanding dues including subsidies used to be realised in March. High paying industrial and commercial consumers are more or less closed. DISCOMs have to give fixed charge waiver to them for the period of closure, which have implication of thousands of crore. COVID crisis might reduce immediate collections by about Rs.100 thousand crore. Beleaguered DISCOMs with financial losses of Rs 27,000 crore in 2018-19 are likely to make much higher losses in FY20 & FY21. They wo...

Currently, the world is witnessing a pandemic situation due to COVID-19 which is impacting various dimensions of the world economy drastically. Lockdown in most of the countries has adversely affected the daily life of people in businesses, financial markets, education sector, etc. But what impact shall it possibly have on the Energy Sector? Well, one shall say that it is obvious the demand must have dropped owing to shutdown of various industries and commercial centres such as shopping malls, business parks, theatres etc. Due to lower demand, various plants may be functioning below their earlier Plant Load Factor (PLF). This might be a rising concern of profitable operations of power generators in current situations. Another factor of concern is the disruptions caused in the supply chain owing to the lockdown. In India, the Ministry of New and Renewable Energy (MNRE) declared the situation as a Force Majeure event, asking state authorities and green energy agencies to provi...